The decision of the “OPEC Plus” alliance to commit to the gradual increase in oil production despite its high prices, raised fears that this would impede the recovery of the global economy from the Corona pandemic, as it coincides with the rise in gas and coal prices to record levels.
The “OPEC Plus” alliance, which includes some of the largest oil exporters in the world, announced last week that it would not increase its oil production by more than 400,000 barrels per day, which it was adding each month, meaning maintaining the planned increase in oil production for the month of November despite the high prices.
With this decision, the “OPEC Plus” alliance ignored the pressures from major consuming countries such as the United States and China, which demanded to rein in the rising oil prices. The coalition attributed its cautious decision to the uncertainty around the Corona pandemic.
Increasing fears of inflation
The large rise in oil prices coincided with another rise in supply due to the record increase in natural gas and coal prices, which led to a rise in inflation to levels that are the highest in years in Europe, which cast a shadow on industrial production. In Europe, natural gas prices have risen to record levels with limited supplies from Russia as well as increased demand for liquefied natural gas from Asia. To make matters worse, gas stocks in Europe have fallen to their lowest level in more than a decade.
The decline in gas supplies means that companies have found themselves forced to turn to oil and coal as a source of energy production, which in turn has led to an increase in demand for these two commodities.
It is noteworthy that the “OPEC Plus” alliance agreed in April of last year to make cuts to its total production of crude oil by 9.7 million barrels per day, equivalent to 10 percent of total global supplies due to the economic repercussions of the Corona pandemic and the confusion it caused. for the global economy. The alliance is working to phase out production cuts as oil demand picks up again.
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